The increase comes as some welcome relief to households as the UK continues to grapple with a cost of living crisis.
However, despite the overall increase, there are times when people might see there tax credit payments go down.
Here’s everything you need to know about why that can be, and the April increase explained.
How much have tax credits gone up?
Here’s how tax credits are changing from April 2023:
Child Tax Credit
- Child tax credit family element – staying the same at £545 a year
- Child element – increasing from £2,935 a year to £3,235 a year
- Disabled child rate – increasing from £3,545 a year to £3,905 a year
- Severely disabled child rate – increasing from £1,430 a year to £1,575 a year
Working Tax Credit
- Basic element – increasing from £2,070 a year to £2,280 a year
- Couple and lone parent element – increasing from £2,125 a year to £2,340 a year
- 30 hour element – increasing from £860 a year to £950 a year
- Disabled worker element – increasing from £3,345 a year to £3,685 a year
- Severe disability element – increasing from £1,445 a year to £1,595 a year
- Childcare element (costs you can claim for) – staying the same at £175 for one child, and £300 for two or more children
Why might my tax credits have gone down?
Your tax credits could go up, down or stop if there are changes in your family or work life.
You must report any changes to your circumstances to HMRC, and should do this as soon as possible to make sure you get the right amount of tax credits, as you will have to pay back the money if you are overpaid.
Tell HMRC straight away if your:
- living circumstances change, for example you start or stop a relationship, move in with a new partner, get married or form a civil partnership, permanently separate or divorce;
- child or partner dies (you do not need to tell HMRC if you’ve already used the “Tell Us Once” service);
- child stops going to childcare for four weeks or more when they would normally go;
- childcare costs stop, go down by £10 or more a week, or you start getting help with them;
- child leaves home, for example moves out or goes into care;
- child is taken into custody;
- child over 16 leaves approved education or training, or a careers service;
- childcare provider is no longer registered or approved;
- working hours fall below 30 hours a week (combined if you’re a couple with children);
- working hours fall below or go above the minimum required to qualify.
You must also tell HMRC straight away if you:
- go abroad for eight weeks or more;
- leave the UK permanently or lose the right to reside in the UK;
- start working for less than 16 hours while claiming childcare costs – except in certain situations;
- have been on strike for more than 10 consecutive days.
You could be fined up to £300 if you do not report certain changes within one month, and up to £3,000 if you give wrong information.
Your tax credits are less likely to be affected – for example by building up an overpayment – if you also tell HMRC as soon as you:
- have any change in income (report this immediately if it goes up or down by £2,500 or more);
- increase your working hours to 30 hours or more a week (combined if you’re a couple with children);
- have a baby or take responsibility for another child;
- start or stop claiming benefits for yourself or a family member, or those benefits change;
- start or stop having a disability that puts you at a disadvantage in getting a job;
- get certification that your child is blind or their certification ends;
- start paying for registered or approved childcare;
- stop getting help with childcare costs.
You should report these changes within one month to make sure you get everything you are entitled to, as payments cannot usually be backdated any further than this.
You can report changes to your circumstances on the government website here.